Can I invest into real estate with pre-tax dollars?

[Andres Alava]

Hello, 

I have heard that it is possible to invest into rental real estate with pre tax dollars. From my own research, it seems that the main two scenarios where this can be done is 1. if you own your own business and attempt to buy the building/office space (under a different entity) and your operational business pays rent to that newly formed entity (LLC/S-corp) that holds the commercial unit and 2. under a self directed IRA that buys the property.

I am wondering if there is a way to buy investment residential rental RE with pretax dollars in any way?

I own my service FL S-corp business grossing ~$160k/yr and netting ~$50K after all expenses including my salary AND a distribution of $40K. I was wondering if instead of taking a distribution (and pay 15.3% tax on that distribution) I can "reinvest" the funds (roughly $90K NET) in residential RE rentals; therefore, investing with pre-tax dollars. Obviously, this implies opening a new LLC that will hold the rental. Also, the newly formed LLC would be funded by my service S-corp (I would be listed as the owner of both entities).

As a side note, I have also read that even in the possible scenario 1 above (buying commercial real estate under another LLC and renting it to your business), the deal cannot be 100% funded with pre-tax money, assuming that this is accurate, I will still be willing to pay the downpayment of my rental investment properties/plan with POST-TAX money but operate the remaining balance with PRE-TAX money. Anyways...bottomline is it even possible to buy residential investment rentals with pretax dollars or not?

Thank you to the community in advance. I am a newby here (at Biggerpockets and the world of real estate investing).